Business Plan & Cash Flow Projections

Business Plan & Cash Flow Projections Pro Forma, sometimes referred to as cash flow projections, foretell future revenue and expenditures for your company. Expenses should be relatively simple based on past spending and the projects and advertising efforts you have planned.

Predicting income is a challenge for most small business owners, but with these tools, you should be able to make estimates that are helpful to your company.

Although you should make your cash flow estimates month-to-month, you might also wish to create quarterly reports. While quarterly patterns are evident for my company, monthly income and spending fluctuations are significant.

1. Expenses

Get costs out of the way first. Determine your average monthly overhead and how that overhead is distributed over the months using your historical expense numbers and your company and marketing plan (which includes expenses for the future). For instance, some expenses, like your internet access cost, your virtual assistant retainer, or your rent, remain constant monthly. Even expenses that vary from month to month, such as long-distance and office supplies, have an average monthly cost.



Other expenses, such as the costs associated with trade exhibitions, insurance, and mailing holiday cards, only seldom arise.

You will need to set aside money in advance to pay for those higher-than-normal bills, so keep track of when the payments for such expenses are due in a given month.

Set aside money for these expenses in a different account each month to ensure you have the funds on hand when the bill comes. For instance, put aside $166.67 monthly in your business savings account to cover a $2000 once-a-year payment.

Once your expense reports are completed, you can calculate your actual monthly overhead by considering the monthly sum that needs to be set aside to cover unforeseen costs. This is your break-even point; if your company is new and has not been profitable, you might aim for this at least once a month.

2. Income

It would help if you now made an effort to forecast your income. Yes, it’s possible that your company is brand new or you’re introducing a new product with no prior sales. But you can still hazard a guess in good faith. When introducing a new service or product, large firms always create pro formas based on historical information about their industry and those of competitors, their business and marketing strategy, and, quite frankly, an informed estimate. The same applies to you.


Examine your sales process or marketing and sales funnel. If you call a particular amount of people, set up a certain number of free consultations, or have a certain number of visitors to your website or store.

What proportion of people typically sign up for your mailing list or purchase your good or service?

What is the typical sale price?

How much time does it typically take to receive the funds? If you need more clarification, make an educated guess based on what is expected in your sector.

It’s all right to hazard a guess because you’ll be testing and improving it at your weekly money meeting.

You may then create an educated forecast of how much income you will have next week or next month.

Next year based on how many visitors, calls, or meetings you have this week, how many of those typically convert, and how long it typically takes to obtain the money.

Similar to this, how many visitors, calls, meetings, sales, etc., do you anticipate having over the coming week, month, or two based on your marketing and promotion plans?

If you don’t have reliable historical data for your company, you should develop two or three scenarios, including the worst, average, and best.

3. Test Your Guess

Business Plan & Cash Flow Projections

The key to employing these educated guesses is that they must constantly be modified in light of new knowledge. Check your Cash Flow Projections and Promotion & Sales Report weekly to determine if you are on track for your goals.

When the downturn starts to happen, you can raise your promotion, make additional phone calls, or update your website’s sales page and make revisions to your Projections based on factual information.

By monitoring your statistics weekly, you may avoid being caught off guard at the end of the month.

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